Hernádi ZsoltElnök- Vezérigazgató, MOL Group

From a national player to an integrated international company

Keeping up with the new environmental challenges continuously

Heti Válasz- Figyelő konferencia

2008.november 26.

Agenda

► Journey so far, the main drivers

► How could we achieve our goals?

► The way forward

2

Starting point: state owned – national oil company

Main characteristics:

Inward lookingEngineering drivenLack of business mentalityUnclear investment criteria: financial, political, securityManagement instabilityInternal focusBUT: good technical and operational knowledge base

3

Privatization and regionalization

Facing new challenges, new business approach…4 psychological barriers:► Cross the border► Venture out from the region► Venture out from the conventional oil business► Step out form conventional corporate models

► State control is not a solution, it is a problem► BUT: a Hungarian national firm is not viable in a global market

Access to capital Project management HR

► The choice: linger in state ownership; sell the assets to a multi or build a Hungary based multinational

4

Growth beyond regional borders

Becoming a regional market leader

Stabilization

Preparations for privatization

MOL history: Within 15 years MOL became from a state owned socialist corporation in international arena acknowledged player of the energy sector

State property

0

1991 1995 1999 2005 2010

5

MOL GroupMOL Group

Cash Cow Step out of core regions

Step out of core

activities

Step out of the existing business

culture, structures► generate cash

► return excess cash to shareholders

► step out of core regions in DS&US

► build up new international capabilities

► enter new businesses even unrelated to oil & gas with or without partners

► find appropriate partner to invest jointly and to prevent from unfriendly takeover

What were the drivers? The way forward…?

Need to be increasingly innovative in Need to be increasingly innovative in transaction structures and corporate transaction structures and corporate

governance modelsgovernance models

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MOL first mover in regional consolidation: acquisitions and partnerships

2000 2001 20032002 2004 2005

Exploration rights in

Oman

Acquisition of

100% in Surgut-7

Acquisition of 100% in

BaiTex

Acquisition of 100% in

Matjushkinskaya

Acquisition of 100%

Tifon

2006 2007

Sale of Natural

Gas Business

Acquisition of 67% in

Energopetrol (with

INA)

Exploration rights in Pakistan

Increasing influence in

TVK to 94.85%Acquisition of

100% IES

Acquisition of 40% interest in a new offshore

block in Cameroon

Production Sharing Contract with the

Kurdistan Regional Government

Acquisition of

36.2% of

Slovnaft

Gain control

over Slovnaft (stake 70.0%)

Acquisition of Shell

Romanian

Retail Sites

Acquisition of

25.0% in INA

98.4% stake in Slovnaft

through public offer

Acquisition of

Austrian Roth

company

Closing of

Shell Romani

aacquisiti

on

Acquisition of 32.9% of

TVK

Gain control

over TVK (stake 34.5%)

ZMB JV signed

Acquisition of Austrian

storage facility

Acquisition of 22.5% stake in Kazakh

exploration block

(Federovsky)

Increasing stake to 27.5% in Kazakh

Federovsky Block

Joint-venture agreement with

CEZ

2008

Strategic co-operation

with Oman Oil Company

(OOC)

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Key drivers

►Management with outstanding track record in operational integration and efficiency improvement

►Technology leadership: further investments to stay ahead of the pack

► Good timing of investment decisions

►High quality asset base

►Opportunity to purchase heavier, sour crude raw material

►High refinery complexity provides outstanding product slate

►Significant market position supported by complex logistics in a ‘landlocked’ environment

►Supply chain optimization along the whole value chain (refineries, petchem, retail)

Crucial factor: state of the art asset base

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Ranking Refinery NCM in 2007 in USD/bbl Country Owner1 Duna 11.2 Hungary MOL2 Bratislava 10.8 Slovak Republic MOL3 Schwedt 10.5 Germany BP/ENI/Shell/Total/PV4 Leuna (Mider) 10.3 Germany Total5 Porvoo 10.2 Finland Neste Oil6 Puertollano 10.0 Spain Repsol YPF7 Plock 9.8 Poland PKN Orlen S.A.8 Omsk 9.6 Russia Gazprom9 Pernis Shell 9.4 Netherlands Shell/Statoil

10 La Coruna 9.0 Spain Repsol YPF…46 Frassino, Mantova 5.2 Italy MOL

Net Cash Margin (USD/bbl) in Europe by companies, 2007*

Net Cash Margin (USD/bbl) in Europe by refineries, 2007*

*Source: WoodMackenzie – European and Russian refiners, Net Cash Margin in 2007

To manage our transactions we have to develop our internal resources and be abreast of the environmental challenges as well

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Key factors of our success

At the same time keep up with the external environmental challenges continuously

These are to be developed permanently

Strong vi

sion

Strong vi

sion

Settlement of internal

resources

Settlement of internal

resources

Focusedapproach

Focusedapproach Management

capabilities

Management

capabilities

The external environment has changed- Global economic downturn in reference to MOL

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► Falling oil price

► Macroeconomic change

► Weaker domestic demand: secondary effects on downstream sales margins

► Tightening liquidity

Instinctive first reaction of the typical companies: everybody is panic-stricken

What can you do when alone in the dark?

Stopping – lawnmower method

Let’s reduce expenses at whatever cost

► Command & control

► Considering employees, development, innovation as cost-only factors

► Restricted future – development limited

► Sends a wrong message to employees: you are not a partner but an enemy

► Risk-taking related to market change

MOL’s answer is different…:transformative change!

Running– blind flying method

Let’s continue and increase investments

► Command & control

► Reduces amount of cash, the flexibility of the company

► Frightens investors

► Sends a wrong message to employees: no cost control

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MOL manages the crisis in an other way than the

others do

Changing the crisis into opportunity and chance

Sustainable governance & business development

=

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The crisis might be the best opportunity to implement structural reforms for long term sustainable growth

We always want to win – so we do it another way

Leadership of the management

► Save your future – think long-term

► Be quick and flexible - follow and adapt to changes continuously

► Step out of the box – answer challenges proactively

► Be cooperate – involve, rely on and lead employees

► Reassure investors – keep strong fundamentals, reappraise opportunities & strategy

► Improve efficiency – reconsider expenses and investments including all type of possible return and added value (indirect-direct, short & long term)

Enhanced trust & credibility among all stakeholders

13

Continuous growth to position MOL for

the post- crisis upswing

Cost efficiency and CAPEX-discipline

Sound, well-managed stress-resistant core business

Post-crisis business approach

Our aim is not the survival but to be among the best for the future as well

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Thank you for your attention!